How to sell handmade cards - Pricing your work9
Posted on 30th July 2012 by Papermilldirect
Filed under How To Sell Handmade Cards
Pricing your work is often one of the most difficult aspects of beginning to sell your handmade cards. This is the second post of our 'How to sell Handmade Cards' series, last week we looked at selling on online market places like Folksy and Etsy. The following is a list of everything you need to consider when pricing up your handmade cards. To help you get a real understanding, we've create a working example at the end of the post.
Cost of materials
You need to be really fastidious at keeping track of your supplies, having a spreadsheet and recording costs will also be useful when filling out a tax return. Remember to add delivery costs to your supplies costs too! With handmade cards you need to count every penny spent to be sure you are working for profit. Consider hidden costs - things like printer ink and dabs of glue, even when it feels you use such minimal amounts for each card, it soon adds up. Finding the right suppliers and buying in bulk can be the difference between a profit and a loss, spend time researching and don't be tempted by a cheap price that compromises the quality of your finished piece.
Include a margin for errors when you are projecting your future profts. If you have made the same card 100 times then it's likely your margin is very low - but if you make one off card designs, you should add in all the costs of testing and practising new techniques.
You need to consider how much to pay yourself. As a guide minimum wage in the UK is £6.50 pence per hour. If a card takes you one hour to create, 20 minutes to photograph, 20 minutes to upload and add to your webshop, and 20 minutes to promote, can you really sell it for £13!?
Be realistic about how much you are really earning against the time you are putting in. Many people are happy to make cards in their free time becuase they enjoy it so much, so effectively they don't pay themselves - this is fine so long as you consider this when deciding to go full time with your new craft business. 5000 sales at a loss does not equate to a successful business, even if everyone else thinks you are a success! Look into batch making your cards.
Wherever you sell your cards on or off line you are likely to incur commission fees - think carefully about how these will impact your profits. Remember to include listing and paypal fees if you are selling online through sites like Folksy and Etsy.
Postage and Packaging
Postage fees should be fully covered by the buyer unless you include them in the cost of the card. Do your homework when setting postage fees as getting it wrong may wipe out all your profit. Use the royal mail postage calculator and invest in some digital scales to check the weight of cards before you offer them for sale online. Also consider this cost when choosing the design of your cards, embellishments may add weight and width taking cards from £0.60p standard letter price to £2.70 for a small packet. Packaging again needs to be light to reduce postage costs. It can be tempting to spend a great deal of time and effort on pretty packaging, but ensure you have your profit margins in mind and consider the extra time any additional details will take. You may be selling one card a month now - that could soon become 100, so be realistic about these little time hungry tasks right from the outset.
Deciding on a price
Are you making cards in bulk enough to sell in packs? When buyers from galleries want to stock your card they will expect to make a decent profit. However you need to ensure you also cover your costs AND make a profit - don't be dazzled by the flattering requests and do your maths when setting a trade price.
Some cards are one offs and as we mentioned earlier, these can cost you much more in both time and supplies. Before offering up a price consider if you have time to create the piece without it impacting your more profitable ranges. It may be that occasional commissions are great for spreading the word about your business, if so then you can afford to make a little less or spend more time on them. People who get something bespoke are often more than happy to write a recommendation which you could add to your website or portfolio.
The handmade card market is huge - thousands of people are selling on online market places as it is so easy to set up shops. Many are hobbyists that don't care much for profits as they just love to make cards and are happy for their sales to just cover the cost of supplies (if that!). If you are serious about making this hobby into a profitable business, don't try and compete with these sellers, you can't! Set realistic prices that are inline with card sellers within your niche, identify card sellers that have lots of sales under their belt when comparing with online sellers. These sellers will most likely have carefully considered their price points.
Target Market Price Point
When starting to sell it can be easy to look at where it's cheapest to set up your shop, pay as you go style sites like US Etsy and UK Folksy can indeed be great for testing the waters and getting some early feedback on your handmade cards. Do careful market research as if your cards have a particular niche market, selling on general sites like this may be a waste of your time. Instead look for curated sites where your products will be more likely to sell, even if you pay higher commission you may be able to sell at a higher price point. Remember that your buyers may be much wealthier than you, so £6 on a handmade card may not seem expensive and if they pay anything less, they may be concerned about the quality. Not everyone is out for a bargain!
Long term goals
Think also about your long term goals when pricing your handmade cards. Within your business plan you may need to consider that in the first year you will actually make a loss, costs such as quality web design, marketing advice and setting up a dedicated and efficient workspace all need to be taken into account. Will you handmake every card or will you have them printed and hand embellish them - these kind of decisions will seriously affect your pricing and profit. You may also want to build up feedback in your first year and use it as a learning curve, selling at a reduced cost can help increase sales. It may be wise to keep your prices at a realistic and profitable price and use seasonal special offers to tempt people to buy cards. This way they still know that the cards are top quality. If you are really serious about making a go of your business then you may also need to seek investment or a grant to cover these initial costs. Sites like http://www.crowdfunder.co.uk/ enable you to make a pitch and win investment, there are also lots of grants available for start up businesses! Try the governments funding finder - http://www.ukbusinessgrants.org/grants-loans-calculator/funding-finder.php and don't assume you are too small / inexperienced to apply, the worst that can happen is they say no!
Working Example of Costs to sell a card on Folksy
Selling on Folksy costs 15p to list an item - and Folksy charges 6% of the total cost of the product you sell before shipping costs. Paypal will charge you 20p + 3.4% of the transaction cost which includes shipping costs. Here is an example of the profit for one card priced on Folksy at £4.00 including p&p
Fees - 24p commission + 15p listing fee = 39p
Paypal fees - 14p commission + 20p = 34p
Postage - 60p
Cost of supplies (eg. 2 pieces of a4 card + 3 found buttons and 10cm of new ribbon, envelope and acetate sleeve ) - 94p
Total Costs =£2.15
Profit = £1.85
The next step is to weigh up whether an income of £1.85 per card (before all your yearly costs have been deducted) is worth it for the time you are investing for each sale! This comes down to your long term goals for the business and also how efficient you are at producing your cards and managing the time you spend promoting them.
Yearly costs to consider when setting prices
There are certain costs that need to be covered that are very difficult to apply on a per handmade card basis. These costs can't be ignored!
Most of us work happily from our homes so these costs are negligible - perhaps a yearly budget for new tools. If you craft at your kitchen table in the evening your lights for example would be switched on whether you were working or not. If you have a dedicated workspace then you should add in the costs of heating and lighting it.
Tools and Maintenence
The cost of new tools and also having tools serviced and repaired.
Stall fees, advertising, stationery, banners and business cards and any costs incurred getting the message out about your business (even if it's just your time!)
Get in touch!
We'd love to hear your feedback on this post - please get in touch via the comments form below, share your experiences and concerns about starting a handmade card business and do ask questions